QUITO, ECUADOR (CNN) -- Ecuador's government declared a 60-day state of
emergency and called out the military Tuesday to staff
basic services during a general strike planned to protest economic
austerity policies.

President Jamil Mahuad's government said the military would
also give "all necessary support" to keep the nation's
oil industry going during the strike.

The decree allows the government to use the military to protect
oil and electricity installations, limit public meetings and
movement and order strikers back to work.

Trade unions angered by Mahuad's economic reforms,
which have ended fuel subsidies and caused prices to soar, are
threatening to paralyze
industry Wednesday and Thursday and bring oil production to a
halt.

Protesting Indian groups have already started blocking roads in
northern Ecuador.

Gatherings that threaten order are banned

Mahuad earlier Tuesday extended an emergency bank holiday
through Thursday to keep panicked citizens from withdrawing
their savings as the government prepared potentially drastic
economic measures.

Monday was declared a surprise holiday after a run on banking
deposits last week that coincided with a 25 percent drop in the
value of the nation's currency, the sucre.

Interior Minister Vladimiro Alvarez said the state of
emergency would not infringe on citizens' rights. But he said it
would guarantee order, and that all gatherings that could
threaten public order would be banned.

"The armed forces will give all necessary support to oil
installations and will help maintain basic services, order and
national security," Alvarez told reporters. "All of the
republic's territory has been made a security zone."

Ecuador last declared a state of emergency in February 1997
during the chaotic final days of President Abdala Bucaram,
fired by Congress for "mental incompetence."

Emergency economic plan due Thursday

"These are measures on the fiscal side which have to be
adopted to face the crisis," she told reporters, calling it the
worst crisis Ecuador had faced in 50 years.

Ecuador's economy has been battered over the past year by
$2.6 billion in damage from El Nino-powered floods and
mudslides and falling prices of its main export, oil.
Economic growth has fallen to near zero, and inflation is running near 50
percent.

Ecuador's bankers charged that Mahuad was losing control of the economy after he ordered the unscheduled bank holidays.

"At this moment, the government has lost control of the country
and must retake control," said Carlos Larreategui, president of
Ecuador's Association of Private Banks. "If it doesn't attack the
fundamental problems, it would be a catastrophe."

The situation has been aggravated by an international
financial crisis that has crippled Latin America's largest
economy, Brazil's, and put the whole region under pressure.

Argentine-style solution considered

Armijos said one move being considered was an
Argentine-style currency board to peg Ecuador's currency to the
U.S. dollar. That measure, considered by other countries like
Russia and Indonesia at the height of their own recent crises,
would be a drastic move for the Andean nation of 12.2 million.

"It's an option we are considering. We haven't ruled it
out," Armijos said, adding that her team had met with members
of a private think tank headed by Domingo Cavallo, the man
behind Argentina's currency system, called "convertibility."

Ecuadorians flocked to withdraw their savings last week on
persistent rumors that foreign currency bank accounts would be
confiscated -- a move the government has repeatedly denied.

Argentina confiscated dollar accounts a little over a year
before it pegged its peso to the dollar in 1991.

The panic pressured Ecuador's sucre currency to an all-time
low against the dollar last week, lashing an already weak
banking system and raising fears that Ecuador could default on
$16 billion in foreign debt.

A political centrist and former mayor of the
capital Quito, Mahuad took office last August. His tough
economic policies to deal with the crisis have been received badly by a majority of the nation's citizens, 63 percent of whom live in poverty.

"Mahuad is the only one responsible for this crisis," said
Fausto Dutan, head of the United Workers Front. "There isn't
anything to eat in this country."